Torex Gold Resources Inc. (the “Company” or “Torex”) (TSX: TXG)
announces the Company’s financial and operational results for the
three and nine months ended September 30, 2020.
Jody Kuzenko, President & CEO of Torex,
stated:
“Q3 was simply extraordinary -- a
record-breaking quarter across many facets of the business. Gold
sales of 133,036 ounces were the highest in our history, as was the
realized gold price of $1,884 per ounce. The record realized margin
of $1,250 per ounce generated during the quarter underpins our best
quarterly financial performance ever, including $163 million of
EBITDA, $173 million of operating cash flow ($138 million before
changes in working capital) and $124 million of free cash flow.
“For the first time since commercial production,
we achieved a net cash position at quarter end, hitting $77
million. This represents a $130 million improvement from last
quarter and an impressive $174 million improvement year-over-year.
During Q3, we paid down $72 million of debt, bringing outstanding
debt down to $155 million. Post quarter end, we paid down an
additional $50 million against our revolver, which deleverages our
balance sheet even further.
“Our focus on COVID controls and health and
safety did not let up – we closed the quarter with 8.5 million
hours worked without a lost time injury and, as of today, that
trend continues. In addition to performance excellence on safety,
production, and costs, we extended our innovation mindset to labour
relations and concluded a new 2-year collective bargaining
agreement with our unionized workforce.
“As we head into the final stretch of 2020, we
are poised to deliver on full-year guidance. Looking to the future,
our primary focus is to continue to deliver consistent and reliable
cash flow from ELG, pay down debt, and internally fund and bring
Media Luna into production in early 2024 – while continuing to
leverage potential opportunities to extend the current production
profile of ELG through 2023 and into 2024. We have built up
significant momentum in our ability as a team to deliver
exceptional operational and financial results, and we are
well-positioned to keep it up.”
This release should be read in conjunction with
the Company’s September 30, 2020 Financial Statements and MD&A
on the Company’s website or on SEDAR. A summary of Torex’s
operating and financial results can be found in Table 1.
Q3 2020
Highlights
- Safety
performance: As
at the end September, surpassed 8.5 million hours worked without a
lost time injury, with more than 9 million hours to date. A
lost-time injury frequency of zero per million hours worked was
maintained, with the last lost time injury occurring more than 18
months ago.
- Labour
relations: Torex and the Mining
Union of the Confederation of Mexican Workers (CTM Union) reached a
2-year collective bargaining agreement. While the norm in Mexico is
for mining companies and unions to negotiate CBAs on an annual
basis, the Company and CTM Union came together to sign a new 2-year
agreement.
- Gold production:
Produced 131,790 ounces, the second-highest quarter of production
in the Company’s history.
- Plant throughput and
availability: Plant throughput averaged 12,870 tonnes
per day for the quarter, with average plant availability of
92%.
- Gold sold: Record
gold sold of 133,036 ounces at a record average realized gold
price2 of $1,884 per ounce.
- Total cash
costs1 and
all-in sustaining
costs1: Total cash costs of $633
per ounce and all-in sustaining costs of $877 per ounce.
- Net income: Record
net income of $60.3 million, or $0.71 per share on a basic and
$0.69 per share on a diluted basis.
- Adjusted net
earnings1:
Record adjusted net earnings of $51.3 million, or $0.60 per share
on a basic and $0.59 per share on a diluted basis.
-
EBITDA1 and
Adjusted
EBITDA1: Record
EBITDA of $162.9 million and record adjusted EBITDA of
$156.2 million.
- Cash flow from
operations: Record cash flow from operations of $173.3
million ($138.1 million prior to changes in non-cash working
capital), including income taxes paid of $19.4 million.
- Free cash
flow1: Record
free cash flow generation of $124.2 million after changes in
non-cash working capital.
- Cash balance: As
at the end of September, cash position totaled $204.0 million,
which excludes $32.0 million of short-term investments related to a
180-day GIC entered into at the start of July.
- Debt: Repaid $71.8
million of outstanding debt during the quarter. Total debt stood at
$155.0 million as of September 30, 2020. In
October, the Company made an additional payment of $50.0 million on
the Revolving Facility.
- Net
cash1: Exited
the quarter in a net cash position of $77.1 million relative to a
net debt position of $53.5 million at the end of the prior
quarter.
- Losses on derivative
contracts: $2.7 million in losses on derivative contracts
this quarter.
1 Refer to “Non-IFRS Financial Performance
Measures” within the MD&A for further information and a
detailed reconciliation.
COVID-19 Update
The enhanced COVID-19 protocols that have been
implemented and multi-layered approach to screening has helped
mitigate the impact of COVID-19 on our operations, our workforce,
and the surrounding communities. At the end of the third quarter,
there were 43 confirmed cases of COVID-19 within our workforce,
with 33 of these individuals fully recovered. Of these, 40
individuals displayed symptoms and tested positive at home while
away from site. Three individuals tested positive after displaying
symptoms at site and were quarantined as outlined in the Company’s
COVID-19 protocols, with contact tracing completed to isolate
anyone potentially at risk.
Continued support has been provided for COVID-19
management in neighboring communities, including the implementation
of infection prevention education campaigns for adults and
children, and the donation and delivery of medical equipment to
mitigate spread of the virus.
Conference Call and Webcast
DetailsThe Company will host a conference call today at
9:00 AM (ET) where senior management will discuss the second
quarter operating and financial results. Please call the below
numbers approximately 10 minutes prior to the start of the
call:
- Toronto local or international:
1-416-915-3239
- Toll-Free (North America):
1-800-319-4610
- Toll-Free (France):
0800-900-351
- Toll-Free (Switzerland):
0800-802-457
- Toll-Free (United Kingdom):
0808-101-2791
A live audio webcast of the conference call will
be available on the Company’s website at www.torexgold.com. The
webcast will be archived on the Company’s website.
About Torex Gold
Resources Inc.Torex is an intermediate gold producer based
in Canada, engaged in the mining, developing and exploring of its
100% owned Morelos Gold Property, an area of 29,000 hectares in the
highly prospective Guerrero Gold Belt located 180 kilometres
southwest of Mexico City. The Company’s principal assets are the El
Limón Guajes mining complex (“ELG” or the “ELG Mine Complex”),
comprising the El Limón, Guajes and El Limón Sur open pits, the El
Limón Guajes underground mine including zones referred to as
Sub-Sill and ELD, and the processing plant and related
infrastructure, which commenced commercial production as of April
1, 2016, and the Media Luna deposit, which is an early stage
development project, and for which the Company issued an updated
preliminary economic assessment in September 2018 (the “Technical
Report”). The property remains 75% unexplored.
For further information, please contact:
TOREX GOLD RESOURCES INC. |
Jody KuzenkoPresident and CEODirect: (647) 725-9982Email:
jody.kuzenko@torexgold.com |
Dan RollinsVice President, Corporate Development & Investor
RelationsDirect: (647) 260-1503Email:
dan.rollins@torexgold.com |
CAUTIONARY NOTESThis news release
contains “forward-looking statements” and “forward-looking
information” within the meaning of applicable Canadian securities
legislation. Forward-looking information includes, but is not
limited to: as we head into the final stretch of 2020, we are
poised to deliver on full-year guidance; looking to the future, our
primary focus is to continue to deliver consistent and reliable
cash flow from ELG, pay down debt, and internally fund and bring
Media Luna into production in early2024 – while continuing to
leverage potential opportunities to extend the current production
profile of ELG through 2023 and into 2024. We have built up
significant momentum in our ability as a team to deliver
exceptional operational and financial results, and we are
well-positioned to keep it up.; and the expected effectiveness of
the enhanced COVID-19 mitigation protocols. Generally,
forward-looking information can be identified by the use of
forward-looking terminology such as “plans,” “expects,” or “does
not expect,” “is expected,” “budget,” “scheduled,” “goal,”
“estimates,” “forecasts,” “intends,” “anticipates,” or “does not
anticipate,” “believes”, “potential” or variations of such words
and phrases or statements that certain actions, events or results
“may,” “could,” “would,” “might,” or “will be taken,” “will occur,”
or “be achieved.” Forward-looking information is subject to known
and unknown risks, uncertainties and other factors that may cause
the actual results, level of activity, performance or achievements
of the Company to be materially different from those expressed or
implied by such forward-looking information, including risks
associated with the impacts of COVID-19 on the mining, development
and exploration operations; and the Company’s ability to achieve
the revised 2020 operational outlook; predictability of the grade;
fluctuation in gold and other metal prices; currency exchange rate
fluctuations; capital and operational cost estimates; satisfying
financial covenants under the Company’s debt facility; illegal
blockades; dependence on good relationships with employees and
contractors and labour unions; the ability to secure necessary
permits and licenses; foreign operations and political and country
risk; risks associated with skarn deposits; hedging contracts;
interest rate risk; as well as those risk factors included herein
and elsewhere in the Company’s public disclosure. Notwithstanding
the Company's efforts, there can be no guarantee that the Company’s
COVID mitigation protocols and community support will be effective
in mitigating the impact of COVID on employees and surrounding
communities. Forward-looking information are based on the
assumptions discussed in the Company’s annual information form and
such other reasonable assumptions, estimates, analysis and opinions
of management made in light of its experience and perception of
trends, current conditions and expected developments, and other
factors that management believes are relevant and reasonable in the
circumstances at the date such statements are made. Although the
Company has attempted to identify important factors that could
cause actual results to differ materially from those contained in
the forward-looking information, there may be other factors that
cause results not to be as anticipated. There can be no assurance
that such information will prove to be accurate, as actual results
and future events could differ materially from those anticipated in
such information. Accordingly, readers should not place undue
reliance on forward-looking information. The Company does not
undertake to update any forward-looking information, whether as a
result of new information or future events or otherwise, except as
may be required by applicable securities laws..
Table
1: Operating and Financial Results
Summary
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
|
|
Sep 30, |
|
|
Jun 30, |
|
|
Mar 31, |
|
|
Dec 31, |
|
|
Sep 30, |
|
|
Sep 30, |
|
Sep 30, |
|
In millions of U.S. dollars, unless otherwise noted |
|
2020 |
|
|
2020 |
|
|
2020 |
|
|
2019 |
|
|
2019 |
|
|
2020 |
|
2019 |
|
Operating Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mining |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ore tonnes mined |
|
kt |
|
|
1,521 |
|
|
|
697 |
|
|
|
1,837 |
|
|
|
1,573 |
|
|
|
1,416 |
|
|
|
4,055 |
|
|
4,379 |
|
Waste tonnes mined |
|
kt |
|
|
10,097 |
|
|
|
4,435 |
|
|
|
11,726 |
|
|
|
10,795 |
|
|
|
11,923 |
|
|
|
26,258 |
|
|
35,654 |
|
Total tonnes mined |
|
kt |
|
|
11,618 |
|
|
|
5,132 |
|
|
|
13,563 |
|
|
|
12,368 |
|
|
|
13,339 |
|
|
|
30,313 |
|
|
40,033 |
|
Strip ratio 1 |
|
waste:ore |
|
|
7.2 |
|
|
|
6.7 |
|
|
|
6.8 |
|
|
|
7.3 |
|
|
|
9.1 |
|
|
|
6.9 |
|
|
8.7 |
|
Average gold grade of ore mined 2 |
|
gpt |
|
|
3.15 |
|
|
|
3.07 |
|
|
|
2.52 |
|
|
|
3.06 |
|
|
|
3.19 |
|
|
|
2.85 |
|
|
2.88 |
|
Ore in stockpile 3 |
|
mt |
|
|
3.4 |
|
|
|
3.1 |
|
|
|
3.1 |
|
|
|
2.4 |
|
|
|
1.9 |
|
|
|
3.4 |
|
|
1.9 |
|
Processing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total tonnes processed |
|
kt |
|
|
1,184 |
|
|
|
688 |
|
|
|
1,134 |
|
|
|
1,116 |
|
|
|
1,139 |
|
|
|
3,006 |
|
|
3,277 |
|
Average plant throughput 8 |
|
tpd |
|
|
12,870 |
|
|
|
7,560 |
|
|
|
12,464 |
|
|
|
12,130 |
|
|
|
12,380 |
|
|
|
10,971 |
|
|
12,004 |
|
Average gold recovery |
|
% |
|
|
89 |
|
|
|
89 |
|
|
|
89 |
|
|
|
89 |
|
|
|
89 |
|
|
|
89 |
|
|
88 |
|
Average gold grade of ore processed |
|
gpt |
|
|
3.83 |
|
|
|
3.18 |
|
|
|
3.35 |
|
|
|
3.87 |
|
|
|
4.11 |
|
|
|
3.50 |
|
|
3.56 |
|
Production and sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold produced |
|
oz |
|
|
131,790 |
|
|
|
59,508 |
|
|
|
108,537 |
|
|
|
125,151 |
|
|
|
138,145 |
|
|
|
299,835 |
|
|
329,660 |
|
Gold sold |
|
oz |
|
|
133,036 |
|
|
|
63,147 |
|
|
|
108,064 |
|
|
|
126,910 |
|
|
|
132,535 |
|
|
|
304,247 |
|
|
322,427 |
|
Financial Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
|
|
256.5 |
|
|
|
109.1 |
|
|
|
172.0 |
|
|
|
190.0 |
|
|
|
198.2 |
|
|
|
537.6 |
|
|
450.8 |
|
Cost of sales5 |
|
$ |
|
|
153.5 |
|
|
|
91.4 |
|
|
|
144.1 |
|
|
|
149.0 |
|
|
|
130.1 |
|
|
|
389.0 |
|
|
330.9 |
|
Earnings from mine operations |
|
$ |
|
|
103.0 |
|
|
|
17.7 |
|
|
|
27.9 |
|
|
|
41.0 |
|
|
|
68.1 |
|
|
|
148.6 |
|
|
119.9 |
|
Net income (loss) |
|
$ |
|
|
60.3 |
|
|
|
3.8 |
|
|
|
(47.0 |
) |
|
|
35.1 |
|
|
|
27.4 |
|
|
|
17.1 |
|
|
36.1 |
|
Per share - Basic |
|
$/share |
|
|
0.71 |
|
|
|
0.04 |
|
|
|
(0.55 |
) |
|
|
0.41 |
|
|
|
0.32 |
|
|
|
0.20 |
|
|
0.42 |
|
Per share - Diluted |
|
$/share |
|
|
0.69 |
|
|
|
0.04 |
|
|
|
(0.57 |
) |
|
|
0.41 |
|
|
|
0.32 |
|
|
|
0.18 |
|
|
0.42 |
|
Adjusted net earnings 4 |
|
$ |
|
|
51.3 |
|
|
|
3.6 |
|
|
|
19.9 |
|
|
|
34.0 |
|
|
|
30.8 |
|
|
|
74.8 |
|
|
33.8 |
|
Per share - Basic 4 |
|
$/share |
|
|
0.60 |
|
|
|
0.04 |
|
|
|
0.23 |
|
|
|
0.40 |
|
|
|
0.36 |
|
|
|
0.88 |
|
|
0.40 |
|
Per share - Diluted 4 |
|
$/share |
|
|
0.59 |
|
|
|
0.04 |
|
|
|
0.23 |
|
|
|
0.40 |
|
|
|
0.36 |
|
|
|
0.87 |
|
|
0.39 |
|
EBITDA 4 |
|
$ |
|
|
162.9 |
|
|
|
44.8 |
|
|
|
39.4 |
|
|
|
102.2 |
|
|
|
116.6 |
|
|
|
247.1 |
|
|
228.1 |
|
Adjusted EBITDA 4 |
|
$ |
|
|
156.2 |
|
|
|
49.3 |
|
|
|
67.4 |
|
|
|
105.1 |
|
|
|
115.1 |
|
|
|
272.9 |
|
|
227.8 |
|
Cost of sales 5 |
|
$/oz |
|
|
1,154 |
|
|
|
1,447 |
|
|
|
1,333 |
|
|
|
1,174 |
|
|
|
982 |
|
|
|
1,279 |
|
|
1,026 |
|
Total cash costs 4 |
|
$/oz |
|
|
633 |
|
|
|
740 |
|
|
|
794 |
|
|
|
617 |
|
|
|
561 |
|
|
|
712 |
|
|
620 |
|
All-in sustaining costs 4 |
|
$/oz |
|
|
877 |
|
|
|
1,015 |
|
|
|
975 |
|
|
|
767 |
|
|
|
675 |
|
|
|
941 |
|
|
820 |
|
Average realized gold price 4 |
|
$/oz |
|
|
1,884 |
|
|
|
1,712 |
|
|
|
1,571 |
|
|
|
1,481 |
|
|
|
1,478 |
|
|
|
1,737 |
|
|
1,379 |
|
Cash from operating activities |
|
$ |
|
|
173.3 |
|
|
|
2.2 |
|
|
|
29.5 |
|
|
|
97.9 |
|
|
|
122.5 |
|
|
|
205.0 |
|
|
203.4 |
|
Cash from operating activities before changes in non-cash working
capital 6 |
|
$ |
|
|
138.1 |
|
|
|
28.1 |
|
|
|
21.8 |
|
|
|
101.4 |
|
|
|
116.9 |
|
|
|
188.0 |
|
|
225.9 |
|
Free cash flow (deficiency) 4 |
|
$ |
|
|
124.2 |
|
|
|
(28.5 |
) |
|
|
2.1 |
|
|
|
71.6 |
|
|
|
96.4 |
|
|
|
97.8 |
|
|
109.6 |
|
Net (cash) debt 4 |
|
$ |
|
|
(77.1 |
) |
|
|
53.5 |
|
|
|
26.3 |
|
|
|
21.7 |
|
|
|
97.2 |
|
|
|
(77.1 |
) |
|
97.2 |
|
Cash and cash equivalents 7 |
|
$ |
|
|
204.0 |
|
|
|
176.9 |
|
|
|
135.7 |
|
|
|
161.8 |
|
|
|
168.0 |
|
|
|
204.0 |
|
|
168.0 |
|
Working capital |
|
$ |
|
|
186.7 |
|
|
|
191.9 |
|
|
|
105.1 |
|
|
|
96.5 |
|
|
|
116.7 |
|
|
|
186.7 |
|
|
116.7 |
|
Total debt |
|
$ |
|
|
155.0 |
|
|
|
225.2 |
|
|
|
155.2 |
|
|
|
174.9 |
|
|
|
255.7 |
|
|
|
155.0 |
|
|
255.7 |
|
Total assets |
|
$ |
|
|
1,214.1 |
|
|
|
1,204.1 |
|
|
|
1,154.7 |
|
|
|
1,229.6 |
|
|
|
1,263.1 |
|
|
|
1,214.1 |
|
|
1,263.1 |
|
Total liabilities |
|
$ |
|
|
368.8 |
|
|
|
419.2 |
|
|
|
373.7 |
|
|
|
394.8 |
|
|
|
464.6 |
|
|
|
368.8 |
|
|
464.6 |
|
- Ore mined from the ELG Underground
of 114 kt and 246 kt is included in ore tonnes mined and excluded
from the strip ratio in the three and nine months ended September
30, 2020. For the three months ended June 30, 2020, March 31, 2020,
December 31, 2019, and September 30, 2019, ore mined from the ELG
Underground was 31 kt, 101 kt, 98 kt and 102 kt, respectively.
- Included within average gold grade
of ore mined is the mined long term, low grade inventory. Excluding
the long term, low grade inventory, the average gold grade of ore
mined is 3.25 gpt and 3.01 gpt for the three and nine months ended
September 30, 2020. For the three months ended June 30, 2020, March
31, 2020, December 31, 2019, and September 30, 2019, excluding the
long term, low grade inventory, the average gold grade of ore mined
is 3.32 gpt, 2.62 gpt, 3.23 gpt and 3.37 gpt, respectively.
- Included within ore in stockpile is
1.0 mt of long term, low grade inventory, with a carrying value of
nil at September 30, 2020. As at June 30, 2020, March 31, 2020,
December 31, 2019, and September 30, 2019, the long term, low grade
inventory was 1.0 mt, 0.9 mt, 0.8 mt and 0.6 mt, respectively, with
nil carrying value. As at September 30, 2020, the long term, low
grade inventory has an average grade of 0.87 gpt.
- Adjusted net earnings, total cash
costs, all-in sustaining costs, average realized gold price,
EBITDA, adjusted EBITDA, free cash flow (deficiency) and net (cash)
debt are financial performance measures with no standard meaning
under International Financial Reporting Standards (“IFRS”). Refer
to “Non-IFRS Financial Performance Measures” in the MD&A for
further information and a detailed reconciliation.
- Cost of sales for the three months
ended June 30, 2020 and the nine months ended September 30, 2020
includes $11.1 million of care and maintenance costs incurred in
the second quarter related to the COVID-19 suspension.
- Cash generated from operating
activities before changes in non-cash working capital was amended
to exclude current income tax expense in order to align with
changes in presentation of the Company’s Statement of Cash
Flows.
- Cash and cash equivalents exclude
$32.0 million of short-term investments (undertaken in Q3 2020)
maturing in January 2021.
- Tonnes per day for the three months
ended June 30, 2020 and the nine months ended September 30, 2020
are based on calendar days in the period of 91 and 274 days.
- Sum of quarters may not add to the
year to date amounts due to rounding.
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